Capital Allocators – Inside the Institutional Investment Industry Jeremy Grantham – Bubbles, Value Investing, and the Long Game at GMO (EP.493)
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Mar 23, 2026 
Jeremy Grantham, GMO co-founder and legendary value investor, looks back on six decades in markets. He revisits wartime frugality, the rise of Batterymarch and GMO, and the bruising lessons of the dot-com era. He digs into bubble spotting, career risk, indexing, and why the AI boom may still lead to overinvestment. Climate philanthropy and long-horizon investing also take center stage.
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Being Right Against A Bubble Still Costs Business
- Jeremy Grantham concluded that large asset managers cannot openly fight major bull markets without wrecking their businesses.
- GMO was right in the tech bust and later earned huge alpha, but clients who fired them never returned.
Career Risk Keeps Institutions Inside Bubbles
- Jeremy Grantham argues every two-sigma bubble eventually falls back to its prior trend, even if the trip takes decades like Japan.
- He says institutions know this data but career risk keeps them publicly aligned with optimism until everyone exits together.
The Wild Stocks Rolling Over Is His Bubble Signal
- Jeremy Grantham says spotting a bubble is easy but timing the final break is nearly impossible because clients run out of patience first.
- His late-stage tell is when speculative leaders start falling while blue chips and the S&P still rise, as in 1929, 1972, 2000, and 2021.
